[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16009]
[[Page Unknown]]
[Federal Register: July 1, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34255; File No. SR-Phlx-92-03]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment Nos. 1, 2, and 3 to the Proposed Rule Change by
the Philadelphia Stock Exchange, Inc., Amending Options Floor Procedure
Advice A-2 and Rule 1066
June 24, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 26, 1992, the Philadelphia Stock Exchange, Inc. (``Phlx''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Phlx. On January
6, 1993,\3\ June 19, 1993,\4\ and June 23, 1994,\5\ the Exchange filed
Amendment Nos. 1, 2, and 3, respectively, to the proposed rule change.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\15 U.S.C. 78s(b)(1) (1982).
\2\17 CFR 240.19b-4 (1993).
\3\Amendment No. 1 is intended to clarify that an Exchange
specialist may accept or refuse contingency orders for placement on
the Exchange order book, except that Exchange floor official
approval is required to refuse to accept a customer contingency
order. See Letter from Gerald D. O'Connell, Vice President, Market
Surveillance, Phlx, to Sharon Lawson, Assistant Director, Division
of Market Regulation, Commission, dated January 5, 1993.
\4\In Amendment No. 2, the Exchange notified the Commission of
its intention to withdraw File No. SR-Phlx-92-37, because proposed
changes to Phlx Rule 1066(c) contained therein, which would clarify
the definitions of stop-limit and stop (stop-loss) orders and add
definitions of all-or-none, opening-only-market, market-on-close,
and cancel-replacement orders, would have duplicated the changes
proposed by the Exchange in this File No. SR-Phlx-92-03. See
Securities Exchange Act Release No. 32380 (May 28, 1993), 58 FR
31765 (June 4, 1993). Also in Amendment No. 2, the Exchange proposed
that Exchange specialists be permitted to accept spread, straddle,
and combination orders, in addition to contingency orders, without
the prior approval of an Exchange floor official. Amendment No. 2
added that Exchange specialists would not be permitted to refuse to
accept customer contingency, spread, straddle, or combination orders
without the prior approval of two Exchange floor officials. See
Letter from Gerald D. O'Connell, Vice President, Market
Surveillance, Phlx, to Michael Walinskas, Staff Attorney, Division
of Market Regulation, Commission, dated June 17, 1993.
\5\In Amendment No. 3, the Exchange deleted from its proposal
its request that Exchange specialists be permitted to accept spread,
straddle, and/or combination orders without the prior approval of an
Exchange floor official. See Letter from Gerald D. O'Connell, First
Vice President, Phlx, to Michael Walinskas, Branch Chief, Options
Regulation, Division of Market Regulation, Commission, dated June
23, 1994.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend Phlx Options Floor Procedure
Advice (``OFPA'') A-2. In connection with the changes proposed to OFPA
A-2, the Exchange proposes to amend Phlx Rule 1066 (``Rule 1066''). The
text of the proposed rule change is available at the Office of the
Secretary, the Phlx, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Phlx has prepared summaries, set forth in sections
(A), (B), and (C) below, of the most significant aspects of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The proposed rule change to existing Exchange OFPA A-2 relates to
the acceptance of contingency orders by Exchange specialists
(``Specialists''). The changes to part (ii) of OFPA A-2 would permit
Specialists to accept contingency orders currently forwarded through
the Automated Options Market System (also known as ``AUTOM'') without
the requirement of approval by an Exchange floor official (``Floor
Official''). Such contingency orders would include those currently set
forth in Rule 1066, as well as additional types of contingency orders
that the Exchange is proposing to add to those currently set forth in
Rule 1066. The Exchange also is proposing to make changes to the fine
schedule for OFPA A-2.
Currently, a Specialist is prohibited by OFPA A-2 from accepting
contingency orders, other than stop (stop-loss) and stop-limit orders,
without the express approval of a Floor Official.\6\ The proposed
changes would make permissible the acceptance of contingency orders by
Specialists without the approval of a Floor Official. The change would
extend this allowance beyond the currently permitted acceptance of stop
(stop-loss) and stop-limit orders to include contingency orders as
defined as such in paragraph (c) of Rule 1066, and will apply to both
customer and broker-dealer accounts. Furthermore, a Specialist would be
able to refuse to accept contingency orders, but may only refuse to
accept contingency orders from customer accounts upon the prior
approval of two Floor Officials.
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\6\In addition, a Specialist may not accept option orders
consisting of two or more option series (i.e., spread, straddle,
and/or combination orders) without a Floor Official's approval.
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Accordingly, the Exchange is proposing that new subparagraphs
(c)(5)-(8) be added to Rule 1066, which sets forth types of orders. The
new text would expand the existing list of types of contingency orders
and specifically define each contingency order permitted. Included
would be the following: all-or-none orders, opening-only-market orders,
market-on-close orders, and cancel-replacement orders. The Exchange
believes that these definitions will ensure standardization on the
floor with respect to the handling and execution of these orders.
Changes to the fine schedule for OFPA A-2 provide for increased
penalties for an infraction of those guidelines applicable to
Specialists.
The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act in general, and with Section 6(b)(5)\7\ in
particular, in that it is designed to promote just and equitable
principles of trade.
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\7\15 U.S.C. 78f(b)(5) (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will impose
any inappropriate burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period: (i) As the Commission
may designate up to 90 days of such date if it finds such longer period
to be appropriate and publishes its reasons for so finding, or (ii) as
to which the self-regulatory organization consents, the Commission
will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC. Copies of such filing also will be available for
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-92-03 and should be
submitted by July 22, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\17 CFR 200.30-3(a)(12) (1993).
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Jonathan G. Katz,
Secretary.
[FR Doc. 94-16009 Filed 6-30-94; 8:45 am]
BILLING CODE 8010-01-M
